Tennessee § 6-56-106 - Authorized investments.

§ 6-56-106. Authorized investments.

In order to provide a safe temporary medium for investment of idle funds, municipalities are authorized to invest in the following: Bonds, notes or treasury bills of the United States; Nonconvertible debt securities of the following federal government sponsored enterprises that are chartered by the United States congress; provided, that such securities are rated in the highest category by at least two (2) nationally recognized rating services: The federal home loan bank; The federal national mortgage association; The federal farm credit bank; and The federal home loan mortgage corporation; Any other obligations not listed in subdivisions (a)(1) and (2) that are guaranteed as to principal and interest by the United States or any of its agencies; Certificates of deposit and other evidences of deposit at state and federally chartered banks, and savings and loan associations. Notwithstanding any other public or private act to the contrary, all investments made pursuant to this subdivision (a)(4) shall be secured by collateral in the same manner and under the same conditions as state deposits under title 9, chapter 4, parts 1 and 4, or as provided in a collateral pool created under title 9, chapter 4, part 5; Obligations of the United States or its agencies under a repurchase agreement for a shorter time than the maturity date of the security itself if the market value of the security itself is more than the amount of funds invested; provided, that municipalities may invest in repurchase agreements only if the comptroller of the treasury or the comptroller's designee approves repurchase agreements as an authorized investment, and if such investments are made in accordance with procedures established by the state funding board; The local government investment pool created by title 9, chapter 4, part 7; Municipalities having a population in excess of one hundred fifty thousand (150,000), according to the 1990 federal census or any subsequent federal census, may also permit investment of idle funds in the following investment instruments: Prime banker's acceptances that are eligible for purchase by the federal reserve system; and Prime commercial paper that is rated at least A1 or equivalent by at least two (2) nationally recognized rating services; Municipalities having a population of not less than twenty thousand (20,000) nor more than one hundred fifty thousand (150,000), according to the 1990 federal census or any subsequent federal census, may also permit investment of idle funds in prime commercial paper in accordance with the following: Such paper shall be rated in the highest category by at least two (2) commercial paper rating services; and The paper shall have a remaining maturity of ninety (90) days or less; Investment in the instruments set forth in this subdivision (a)(7) shall first be authorized by the municipality's legislative body, acting by resolution or ordinance. In addition, investment in such instruments shall be prohibited until the legislative body has adopted written policies to govern the use of such instruments, with such policies being no less restrictive than those established by the state funding board to govern state investments in such instruments; The municipality's own bonds or notes issued in accordance with title 9, chapter 21; and Investment in the instruments set forth in subdivision (a)(2), (a)(5), (a)(7), or any type of investment authorized pursuant to a municipality's charter that is of a type that is not included in this part shall require the following: The municipality's legislative body must authorize the investment by ordinance; and The legislative body must adopt a written enforceable investment policy by ordinance to govern the use of investments, with the policies being no less restrictive than those established by the state funding board to govern state investments in these types of instruments. Investment in instruments covered by this subdivision (a)(9) shall be prohibited until the legislative body has adopted written policies to govern the use of the investments or an ordinance has been passed to authorize the investment. The investments listed in subdivisions (a)(1)-(4) may have a maturity of not greater than four (4) years from the date of investment; however, such investments may have a maturity of greater than four (4) years from the date of investment if such maturity is approved by the comptroller of the treasury or the comptroller's designee. Proceeds of bonds, notes and other obligations issued by municipalities, reserves held in connection therewith and the investment income therefrom, may be invested in obligations that: Are rated in either of the two (2) highest rated categories by a nationally recognized rating agency of such obligation; Are direct general obligations of a state of the United States, or a political subdivision or instrumentality thereof, having general taxing powers; and Have a final maturity on the date of investment of not to exceed forty-eight (48) months or that may be tendered by the holder to the issuer thereof, or an agent of the issuer, at not less than forty-eight-month intervals. Such proceeds and the investment income thereon may also be invested as otherwise set forth in this section. The investments authorized by this section are in addition to those authorized in any other general law or in any municipality's charter. Acts 1943, ch. 47, § 1; mod. C. Supp. 1950, § 3516.29 (Williams, § 3516.31); T.C.A. (orig. ed.), § 6-805; Acts 1985, ch. 299, § 1; 1988, ch. 632, § 1; 1990, ch. 814, § 1; 1991, ch. 165, § 1; 1992, ch. 592, § 7; 1993, ch. 448, § 3; 1994, ch. 752, § 7; 1994, ch. 794, § 1; 1994, ch. 806, § 2; 2000, ch. 996, §§ 4-6; 2004, ch. 466, §§ 1, 2; 2006, ch. 693, §§ 5-7; 2010, ch. 868, §§ 14, 15. Compiler's Notes. For table of populations of Tennessee municipalities see Volume 13 and its supplement. Cross-References. Investing in obligations of public housing authority authorized, §§ 13-20-613 , 35-3-115 . Investments in TVA bonds, § 35-3-119 . Collateral References. Power of boards or officials to depart from literal requirements in respect of deposits or loans of public funds in their control. 104 A.L.R. 623 .